Saturday, August 8, 2015

Fridays can be very telling, and while Fridays close in crude oil was not a clean break through support commodity traders need to be on their toes for Mondays open. So there is no better time to have our trading partner Mike Seery back to give our readers a recap of last weeks commodity futures market and help us put together a plan for the upcoming week. Mike has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Crude oil futures in the September contract settled last Friday in New York at 47.12 a barrel while currently trading at 44.10 trading lower for the 3rd consecutive trading session as I’ve been recommending a short position over the last 8 weeks and if you took that trade place your stop loss above the 10 day high which currently stands at 49.52 as the trend seems to be getting stronger to the downside. Crude oil futures are trading far below their 20 and 100 day moving average telling you that the trend is sharply lower as the chart structure will not improve until later next week as it certainly looks to me that oil prices will retest $40 a barrel as a strong U.S dollar continues to put pressure on oil and many of the commodity markets.

Remember as a trader you must trade with the path of least resistance and the oil market is clearly to the downside as picking bottoms and picking tops is extremely difficult to do successfully over the course of time. Traders reacted to Friday mornings monthly unemployment report showing around 215,000 new jobs created as it certainly looks like an interest rate hike could be eminent in the month of September which is also very bearish the commodity markets in general so continue to play this to the downside, however if you did not take the original trade you have missed the boat as I don’t like to chase markets so look at other markets that are beginning to trend.
Trend: Lower
Chart Structure: Solid

Gold futures in the December contract settled last Friday in New York at 1,095 an ounce currently trading at 1,095 as this market has been incredibly nonvolatile at the current time as prices have gone nowhere over the last three weeks as I’ve been recommending a short position from 1,170 & if you took that trade place your stop loss above the 10 day high which currently stands at 1,103 risking around $8 dollars or $250 per mini contract plus slippage and commission as the chart structure is outstanding.

I have been trading the commodity markets for a longtime and I can’t remember gold trading in such a nonvolatile manner as prices continually go nowhere which is putting me to sleep as I’m getting frustrated in this market because as a trader you want to look at markets that are moving but the risk/reward is in your favor so I will just keep the proper stop loss and if you are stopped out move on and look at other markets.

Gold futures are still trading below their 20 and 100 day moving average telling you that the trend is to the downside as a strong U.S dollar continues to keep a lid on the precious metal prices and I think that’s going to continue in 2015, however the stock market has hit a six month low and I think that’s starting to support prices as gold has had a very difficult time breaking 1,080 which is been hit on a half dozen occasions only to rally as prices remain in a very tight consolidation but continue to remain short.
Trend: Lower
Chart Structure: Outstanding

The S&P 500 reacted negatively toward the monthly unemployment report and is trading lower for the 2nd consecutive trading session down another 14 points this afternoon in Chicago trading at 2064 in the September contract as I recommended a short position in Thursday trade while placing your stop loss above the 10 day high at 2110 now risking 44 points or $ 2,200 per mini contract plus slippage and commission as the chart structure is very tight at the current time.

If you have been following my previous blogs you understand I like to sell breakouts as this has not broken out to the downside, however the Dow Jones industrial has hit a six month low and has broken out so I chose the S&P 500 so take a shot as the commodity and stock markets around the world look vulnerable to another leg down.

If you take this trade my recommendation is to place your stop above the 10 day high, however you can also place the stop above the all time high which is 2127 which might be a better place if your account balance can withstand that loss in case we are wrong but it seems hard to believe with commodity prices plunging on a daily basis that the stock market can retain these lofty levels in my opinion as I've been recommending short positions in many of the commodity markets for several months as I think there are problems developing that we don't know just yet.
Trend: Lower
Chart Structure: Solid

Coffee futures in the September contract settled last Friday at 125.25 while currently trading at 128 a pound up around 300 points for the trading week now trading above its 20 day but still below its 100 day moving average as I’ve been recommending a short position getting stopped out breaking even on this recommendation as this trade fizzled out at the very end.

I’m currently recommending to sit on the sidelines in the coffee market at this time as I’m a little disappointed getting stopped out, however we must move on and look at other markets that are beginning to trend as I’m still recommending a short position in sugar, cocoa, and cotton at the current time but keep a close eye on coffee as the trend can still remain bearish in the next couple of days as the chart structure still remains extremely tight so I’m not giving up on this trade but when prices hit a 10 day high it’s time to move on.

Many of the commodity markets were higher this afternoon as the U.S dollar reversed earlier gains but we are not seeing any real strength in the coffee market at the current time as the long term down trend line is still intact but I’m a short term trader which means I look for a four week high and four week lows as an entry point as you must be nimble and flexible and not always have a biased opinion as prices can change on a dime.
Trend: Mixed
Chart Structure: Solid

Sugar futures in the October contract settled in New York last Friday at 11.14 while currently trading at 10.65 a pound as I’ve been recommending a short position from around 11.50 and if you took that trade continue to place your stop loss above the 10 day high which now stands at 11.64 as the chart structure will start to improve later next week. Sugar futures are trading far below their 20 and 100 day moving average as the trend seems to be getting stronger on a weekly basis trading lower for the 2nd consecutive trading session as I think there is a possibility that sugar will crack 10.00 in next week’s trade as crude oil prices continue to plunge therefore pressuring sugar so continue to play this to the downside in my opinion as the risk/reward is still in your favor.

Many of the commodity markets were higher today including several soft commodities as the U.S dollar reversed earlier gains as many markets were probably oversold but to predict day to day action is extremely difficult as I would rather follow the path of least resistance which is to the downside as I’m strictly a trend follower so continue to take advantage of any rallies as I still think lower prices are ahead as supply issues continue to keep a lid on prices and unless lower production happens in 2016 I think prices grind much lower over the course of time.
Trend: Lower
Chart Structure: Solid